What Liability Does a Property Appraiser Take When Establishing a Value of a Property?

Home Appraisal

An appraiser does not carry the weight of liability if an appraisal is wrong unless the assessment has been grossly neglected or has involved a criminal act, for example, the fraudulent inflation of a property's value for monetary gain. What the New York property appraiser essentially does is makes an estimate or an educated guess of a property's value based on the current market scenario.

If an appraiser faces financial damage because he relied on an incorrect appraisal report, he can file a claim against the property appraiser. To safeguard themselves against such claims appraisers carry E & O insurance ("errors and omissions") to insure themselves against these mistakes. Though appraisers carry professional liability insurance, as most third-party report providers (surveyors, market study analysts, development consultants) do, the insurance has nothing to do with the value of the property that they are appraising. Most professionals increase their liability coverage as they grow their client list and workload.

The insurance provides coverage in case of a lawsuit, whether it is substantiated or frivolous. Everybody looks for a scapegoat when something goes wrong, and it's effortless to point to the guy that initially established the property value. However, this insurance is rarely used since very few claims are made.

In the appraisal, the New York property appraiser does certify that they carried out the examination as per the uniform standards of professional appraisal practice. They provide their professional opinion on the basis of the information that the property owner offers them. What you do with that information and what investment decisions you make afterward is then up to you.

If a state licensed or certified real property appraiser does not use "recognized methods or techniques" or follows the Uniform Standards of Professional Appraisal Practice (USPAP), he would be violating USPAP. Each state appraisal regulatory agency where an appraiser holds a license or certification is responsible for investigating complaints and taking appropriate disciplinary action against an appraiser.

Filing a complaint with a state appraisal regulatory agency is highly unlikely to assist in such matters as a borrower hoping to get an appraisal revised; rather, the purpose of these complaints is to ensure a real property appraiser is complying with applicable law.

Should you feel there is a legitimate reason to complain about the performance of any appraiser, that complaint should be filed with the state appraisal board for the state in which the appraisal was performed. You should visit the Appraisal Complaint National Hotline website to file a complaint.

Buying real estate could be overwhelming if you do not have the right resources and expert advice on when to buy. It is essential that you consult with the experts before you plunge in - especially in cities like New York where the market always seems to be volatile.

RDC Associates is a leading real estate appraiser with a team of experts delivering full-service valuation & real estate appraisal services across NY, NJ & PA.

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